Good to Great now not so Great

Esther Derby tweeted a great question that stuck in my noodle the last week: estherderby: skimming Good to Great. some profiled companies ain’t so great anymore.

Since Good to Great provided great inspiration for me, this caused me some consternation. Circuit City, Fannie Mae, and Wells Fargo aren’t doing so well. Turns out, Esther isn’t the only one asking this. As Peter Levitt (of Freakonomics Fame) asks, and blog author Peter Galuzska points out, it’s not exactly fair criticizing Jim Collins for things that happened 8 years after he published his book, since he was looking at historical market performance. True, but makes you wonder at taking the advice in the book.

Good to Great analyzes 11 companies that had average stock returns, and then had a dramatic jump in returns after a certain inflection point. It analyzes them for patterns in the data and comes up with a number of principles for what catapulted them to greatness including: level 5 leaders — leaders with personal humilty and great professional will; a hedgehog concept — focus on the intersection between the three circles of what you are best at the world at, what you can make money doing, and what you love; turning the flywheel — iterating on your plan so that you evolve into greatness; the stockdale paradox – having absolute faith you will survive and simultaneously confronting the most brutal facts of your current situation. Then I recalled that what Jim Collins states at the end of the book is that what may take your company from good to great is not what will make it an enduringly great company.

For those, he points to the Built to Last book principles:preserve the core ideology and stimulate change, create BHAG’s (Big Hairy Audacious Goals) — like the 747 at Boeing; don’t tell time, build clocks — build a lasting organization, having a core ideology other than maximizing profits – like 3M’s innovation culture or Nordstrom’s cultlike focus on customer satisfaction. These businesses from Built to Last are still enduring, not all are great…but they all endure. I wonder if Circuit City and Fannie Mae had followed these principles if they would have survived. Did Circuit City not follow its core ideology when it fired all its senior sales people and replaced them with people who knew nothing about their products? Or was Fannie Mae the victim of the unforeseeable challenges in the lending market?

It’s hard to know without doing original research of what went wrong. That is one of the great things about these books is that they are built on rigorous research. This is unlike many of the avalanche of business books based on success stories that have little or no data to back them up, like Who moved my cheese. Some have rightly argued that they suffer from selection bias, selecting the winners from a group of companies and finding what was common about them, while not looking for those same factors in the businesses that failed. Yes, this is true, and is the challenge with any research where you are trying to uncover causality without using the scientific method. It’s hard to create a true scientific test when there are human lives at stake. All you can do in the real world is experiment, see what works, and then measure your results. Hmmm…this is starting to sound a lot like Scrum to me.

So what does this have to do with Software Project Management? These books provide useful ideas of what you can do in your organization with teams to get unstuck. For instance, it gives you a lesson for how great leadership behaves to encourage greatness. A level 5 leader looks surprisingly like a servant leader in Scrum (personal humilty and a high degree of professional will). Or building a core set of values that you don’t change and experimenting with everything else (like adopting team values in your project charter ).

So, while the underlying research may be called into question, the ideas in these books stick, because they make sense, because they are sometimes paradoxical, and they are based on some research. I wonder what a similar research project would be like for Software Projects? Is this analysis similar to the Chaos report, where researchers look at common factors for failed and successful projects and try to isolate those factors? If we wanted to study what a successful project was what factor would we use to measure success? We couldn’t use market returns. Traditional measures like “on time, on budget on scope” also fall flat, as projects where that was the case, called challenged projects, are often a market success. What do you think?